ALBARAKA TÜRK KATILIM BANK SUSTAINABILITY STUDIES

Albaraka Türk is a leading financial institution that is sensitive to people and the environment, supports economic and global development, and works with all its stakeholders for a sustainable world with the support of its employees as part of its Sustainable Banking Programme. Albaraka Türk, whose ultimate goal is Net Zero Emission, has established its sustainability strategy within the framework of Environmental, Social and Governance (ESG).

The Bank's sustainability strategy envisages the realisation of the Bank's activities and the effective management of the risks associated with these activities through roadmaps created in specific areas. In this context, Albaraka Türk carries out its Sustainable Banking Programme within the framework of the United Nations 2030 Sustainable Development Goals. Corporate responsibility activities are also carried out as part of the programme. These efforts are particularly focused on education, health, environment and vulnerable groups.

Sustainability Strategy and Targets

Albaraka Türk launched the Sustainable Banking Programme with the support of its parent company ABG. Within the scope of the program, the Bank aims to be a leading financial institution that is sensitive to people and the environment, supports economic and global development, and works with all its stakeholders for a sustainable world with the support of its employees in line with the relevant policies and procedures.

Acting with a responsible banking approach while fulfilling its obligations towards the environment and society, Albaraka Türk considers sustainability activities while formulating its banking targets and develops its business model within the scope of the Environmental Social Governance System (ESG).

As Turkey's first participation bank and the only participation bank traded on the Borsa Istanbul (BIST), Albaraka Türk achieved significant success in 2023 thanks to its expert human resources and technological competencies.

In 2015, Albaraka Türk initiated the Zero Waste Project, which resulted in many improvements in waste management and energy consumption control within the Bank, and as a result, the Bank was awarded the title of the first Leed Gold Certified Bank Headquarters building. Since 2016, Albaraka Türk has been voluntarily responding to the Carbon Disclosure Project's Climate Change and Water Security surveys and has been continuously raising its CDP scores. In CDP reporting, the Bank's Scope 1 and 2 emissions are targeted to be reduced by 50.4% by 2030.

SBTi Objectives

Albaraka Türk, which has been included in the BIST Sustainability Index since 2019, continued to develop its ESG activities built on the banking model.

In the SBTi project, which started in 2021, the Bank made significant progress in 2023 and completed its work to a large extent. In the first quarter of 2024, the Bank aims to make a target commitment to SBTi to reduce greenhouse gas emissions from commercial real estate, long-term corporate loans, electricity generation sector in the corporate loan portfolio and electricity generation project finance portfolio.

Since 2016, Albaraka Türk has been measuring and reporting Scope 1 and Scope 2 emissions to fulfil its environmental obligations. Announcing its emission reduction targets in the Science Based Target Initative (SBTi), an internationally recognised platform, contributes to our principles of transparency and reliability and prepares the Bank for the Sustainable Banking ecosystem. Preparing the infrastructure for future sustainable banking policies will become more feasible with concrete targets to be submitted to the SBTi formation.

SBTi requests banks to submit Scope 1, 2 and 3 targets. It is mandatory to take the base year as the latest year in the targets to be submitted to SBTi. Accordingly, 2022 has been determined as the base year. Targets are set to keep global warming constant at 1.5°C.

With its goal of achieving net zero emissions and its Environmental Social Governance System, Albaraka Türk aims to be a leader in this field by taking voluntary steps to solve many environmental problems such as the climate crisis.

Albaraka Türk is proud to be the first participation bank to publish an integrated annual report in 2023 and continues its sustainable and digital banking activities without slowing down.

In addition, the Bank acts in compliance with the decisions taken by local authorities, regulatory bodies and legislation and regulates its policies. The Bank closely follows the sustainability agenda and supports national and international initiatives in this field.

Within the scope of Albaraka Türk's sustainability efforts;

- To continue its activities to reduce Scope 1 and 2 emissions through the Carbon Disclosure Project,

- Calculate Scope 3 emissions and commit mitigation under the guidance of SBTi in order to achieve net zero emissions and limit the temperature increase to 1.5oC in accordance with the 2015 Paris Climate Agreement,

- Maintaining its position in the BIST Sustainability Index and increasing its rating in Refinitiv reporting,

- To contribute to the solution of many environmental problems such as climate crisis, water and solid waste pollution problems through the Environmental Social Governance System established within the Bank,

- Expanding the portfolio of sustainable finance products such as renewable energy financing, rooftop SPP, grey water loans,

- To contribute to ESG by utilising the funds provided through sustainable sukuk in sustainable projects that comply with the standards,

- To develop LEED Gold Green Building Certification, Zero Waste etc. projects,

- To inform its stakeholders transparently about sustainability,

- To develop a reporting infrastructure in line with the Environmental Social Governance strategy,

- The Bank supports the Sustainable Development Goals implemented by the United Nations Development Programme and aims to align the Bank's business processes with these goals.

Sustainability Structuring

Albaraka Türk carries out its sustainability activities through the Corporate Governance and Sustainability Committee at the Board of Directors level and the Sustainability Executive Committee reporting to the Head Office.

Natural Capital

Albaraka Türk's natural capital consists of all renewable and non-renewable resources needed in the service cycle. These include energy, water and paper. Another channel through which operations interact indirectly but significantly with natural capital is the Bank's lending activities. In both of these areas, Albaraka Türk aims to minimise its environmental footprint and produce less waste.

Sustainable Banking Programme

As part of its Sustainable Banking Programme, Albaraka Türk works in cooperation with all its stakeholders for a livable world. The Bank closely follows global to address the climate crisis, evaluates natural capital within the scope of its goals and actions, and plays a pioneering role among participation banks.

Albaraka Türk's Environmental Policy provides the framework for the Bank's efforts to protect and develop natural capital.

Albaraka Türk's Green Building Project (LEED EBOM), Carbon Disclosure Project (CDP), TSE COVID-19 Safe Service Certificate, Zero Waste Project, ISO 50001 Energy Management System Certificate, and many other activities indicate its sensitivity and respect for the environment, its sensitivity in using the world's resources, and its contribution to the goal of leaving a livable world for future generations.

Double Materiality

As part of its compliance with sustainability and transparency principles, Albaraka Türk plans to include the issue of double materiality in its integrated annual report in 2024. This approach will ensure that sustainability-related risks and opportunities are understood and commitments are clearly communicated to stakeholders. It also aims to strengthen transparency and accountability principles and manage sustainability performance more effectively. The 2023 Integrated Annual Report is the first step in this transformation process and reflects the transition to a double materiality approach to be presented next year.

ISO 14001 Environmental Management Systems

Albaraka Türk carries out its environmental sustainability activities within the scope of ISO 14001 Environmental Management Systems.

Aware that its products and services interact with the environment, the Bank focuses on contributing to the fight against the global climate crisis by minimising the environmental impact of this interaction.

Considering sustainability efforts as an integral component of its corporate culture, Albaraka Türk is a pioneer among participation banks in the field of environmental sustainability.

The Bank carries out numerous projects in line with its environmental sustainability targets.

ISO 50001 Energy Management System Certificate

ISO 50001 helps to establish the systems and processes necessary to improve energy performance and efficiency. It also provides guidance in reducing energy consumption and costs. 

As part of its sustainability activities, Albaraka Türk completed its efforts to obtain ISO 50001 Energy Management System Certification in 2023 and was awarded the certificate.

This certificate will help Albaraka Türk Headquarters to implement a robust energy management system.

The only participation bank in the BIST Sustainability Index since 2019

Albaraka Türk is included in the BIST Sustainability Index, which consists of companies whose corporate sustainability performance is at a high level and whose shares are traded on the Borsa Istanbul.

The companies in the index are determined based on an assessment of environmental policy, environmental management systems, biodiversity policy, climate change management, board structure, anti-bribery policy, anti-bribery systems, human rights policy, human rights systems and health and safety systems.

 Listed in the index since 2019, Albaraka Türk continuously makes improvements and developments in line with the index rules, international regulations and best practices. Internalising sustainability in its daily service cycle, Albaraka Türk aims to spread the requirements of the concept of sustainability to all its stakeholders and to encourage them. Through its operations, Albaraka Türk strives to leave a cleaner environment for future generations and to maintain a safe and fair business environment and a more robust financial structure in line with ethical principles.

The Bank has designed its business model in accordance with the Environmental Social Governance (ESG) System and has linked its activities to the United Nations 2030 Sustainable Development Goals (SDGs).

Target Commitment to the Science Based Targets Initiative (SBTi)

In 2021, Albaraka Türk announced its commitment to the Science Based Targets Initiative (SBTi) and will announce its emission reduction targets in the coming period.

Sustainability indices are on the radar of investors who want to invest in companies that adopt sustainability and ESG criteria and play a decisive role.

LEED GOLD Green Building Certified Head Office

Albaraka Türk's Head Office Building, built according to the latest technologies, is Turkey's first LEED GOLD certified Bank Head Office building. The certification was obtained within the scope of studies that began in 2016. Albaraka Türk was awarded the certificate on the basis of criteria such as carbon footprint, water and energy efficiency, environmental sensitivity of materials and resources used, internal environmental quality, and innovation.

Active participant of the Carbon Disclosure Project (CDP)

In 2017, Albaraka Türk responded to the climate change survey of CDP, the world's most comprehensive and prestigious environmental project, which aims to collect and share information that will enable companies, investors and governments to take measures against the threat of climate change. The Bank has also been responding to the water and water security survey since 2018.

Albaraka Türk's CDP Journey

Albaraka Türk within the scope of CDP in 2018-2023;

- Scope 1, 2 and 3 greenhouse gas emission calculations and verification for the period,

- Climate Change risks, opportunities and targets,

- Water Management risks, opportunities and objectives,

- Water consumption calculations and verification of the period,

- Responses to the CDP Climate Change Survey,

- Responses to the CDP Water Security Survey,

shared.

Zero Waste Project

Within the scope of the Zero Waste Project initiated by the Republic of Turkey Environment, Urbanisation and Climate Change, it is aimed to prevent waste, use resources more efficiently, reduce the amount of waste generated and waste.

The projects implemented by Albaraka Türk within the scope of the Zero Waste Project are as follows:

- Photocopiers have been reprogrammed to prevent unnecessary printouts that are sent to the printer and forgotten or sent again, and the option of front/back printing has been set as default on the devices.

- Waste paper was directed to authorised recycling facilities.

- In order to prevent waste batteries from entering the nature, batteries are separated and collected at the Head Office building. In this context, approximately 43 kg of waste batteries were separated and delivered to the official waste collection authority TAP (Portable Battery Manufacturers) in 2023.

- The cardboard boxes used in the transport works of the Head Office building are used approximately 15 times, and the cardboard boxes that have completed their economic life have been sent to the recycling facilities of the municipalities.

- Periodic maintenance of vehicles, equipment and fixtures was carried out regularly, thus supporting the long-term use of the equipment.

- Albaraka Türk also contributed to the Zero Waste Project by achieving significant paper savings in 2023 through its digital transformation process.

Projects to reduce energy consumption

Energy efficiency activities such as covering the exterior of the Head Office building with glass film, regulating lighting systems and their durations, fixing the temperature settings on thermostats, and regulating the working hours of heating and cooling systems resulted in a reduction of 780 MWh in electricity consumption by approximately 5.5% in 2023.

Support for "Earth Hour"

Since 2007, Albaraka Türk has participated in WWF's "Earth Hour" event, which calls for turning off the lights for one hour on the last Saturday evening of every March to draw attention to the climate crisis. On 25 March 2023, between 20:30 and 21:30, Albaraka Türk supported the call by turning off all the lights in its headquarters building.

In the design of the Head Office building, it is aimed to utilise daylight at the highest level. In this way, it is possible both to reduce the energy spent on lighting and to utilise the positive effects of daylight on the employees working indoors. High efficiency lighting fixtures are used in the building and fluorescent bulbs are selected from low mercury models.

Efforts to reduce water use

Water saving apparatuses are used on the sink taps in the Head Office building, which provide the same effect with less water by increasing the water pressure. This practice has resulted in a 20% saving in water consumption.

The water requirement of green areas is met by drip irrigation system and sprinkler method using artesian water, contributing to the efficient use of water. The waste water used in the toilets and sinks of the Head Office building is treated with the Grey Water project and reused in the reservoirs.

Plant species with low water demand and suitable for the climatic conditions of the region are used in the green areas and landscaping of the General Directorate.

Air conditioning and fresh air studies

High efficiency filters are used in the air handling units to ensure that the outdoor air is purified from dust, dirt and toxic gases and enters the Head Office building. Fresh air ratios supplied to the building are above the international level. Air handling units supplying fresh air are monitored through the automation system and the fresh air rate supplied to the building is kept under constant control. "No smoking" signs are placed at points where there is a risk of cigarette smoke entering the building.

The amount of refrigerant gas in the equipment used in Albaraka Türk Head Office building is within the GWP and ODP values.

Measures within the scope of office cleaning

Sustainable cleaning materials are preferred for cleaning the office floors of the Head Office building; cleaner, safer, healthier and environmentally friendly products are used. In order to reduce the dust carried by employee and visitor shoes, there is a minimum 3 metre long polyamide surface, dust and moisture absorbing mat at the entrances of the building. On the other hand, within the scope of combating possible pests, drugs approved by the General Directorate of Primary Health Care Services of the Ministry of Health, which are respectful to nature, are used.

An environmentally friendly approach in service vehicles and personnel transport

The number of marketing vehicles used at Albaraka Türk was significantly reduced, resulting in a reduction in exhaust gas emissions.

A vehicle tracking system was installed on branch marketing vehicles; after-hours vehicle utilisation was monitored in detail and reported to regional/branch managers. In this way, awareness was raised to reduce the use of marketing vehicles out of service, and fuel consumption was reduced.

Personnel shuttle buses are used for the transport of the employees of the Head Office. Carbon emissions are reduced with this public transport.

Albaraka Türk also prioritises environmentally friendly products in its procurement activities.

Contribution to natural capital through products

Albaraka Türk believes that renewable energy will continue to play a critical role in the transformation process in the energy sector with increasing momentum in the coming period in terms of sustainable development and environmental awareness.

Therefore, while contributing to the realisation of Solar Power Plants (SPP) and Wind Power Plants (WPP) renewable energy projects with its financial support, it also adopts a positive perspective towards building a green and sustainable future.

In order to leave a clean environment for future generations, Albaraka Türk is committed to diversifying its energy portfolio and continuing its support for renewable energy in the coming period.

Grey Water/Environmental Credit

Combining its innovative product approach with its environmental responsibilities, Albaraka Türk provides its customers with Grey Water/Environmental Loans. The Grey Water Loan Project aims to finance projects that aim to reuse the recycled water obtained from grey water in areas such as reservoir feeding, garden irrigation, car washing, rough cleaning works, cooling tower feeding, and laundry.

The target audience of the product is individual and commercial customers who need financing for their systems and environmental projects in this field for purposes such as contributing to sustainability, water efficiency, energy efficiency, environmental sensitivity of materials and resources, indoor-outdoor building environmental quality, recycling and preventing waste of resources. Within the scope of the Grey Water/Environment Loan, Albaraka Türk offers its customers grace periods and long maturities, profit rate discounts, and financing with contribution fees.

In addition, the Bank continues to take steps in line with its sustainability targets and plans to take important initiatives to develop a Solar Power Plant (SPP) project to meet its own electricity consumption.

In this context, the necessary processes for the detailed planning, execution and operation of the SPP project were initiated in cooperation with a consultancy firm that stands out with its expertise and experience.

The Bank believes that with this project, it will not only meet its own energy needs but also adopt a sustainable business model by minimising its environmental impact.

In the period ahead, with the strong support of the senior management, this important step will gain momentum and be completed successfully, and the Bank will move forward with determination to become an exemplary organisation not only for its leadership in the finance sector but also for its impact in the field of sustainability.

Albaraka Türk CDP Scores

Albaraka Türk offset the total electricity it consumed in 2023 by purchasing YEK-G certificates. Therefore, Scope 2 market-based emission value is 0. A total of 5,898.48 tonnes CO2e of carbon emissions in the reporting period of 2023 was offset with YEK-G renewable energy certificates.

In 2023, 780 MWh of electricity consumption was reduced by approximately 5.5% through energy efficiency activities.